You’ve seen the headlines and heard the reports: Brick-and-mortar businesses are struggling.

2020 hasn’t been kind to traditional retail models — malls and main streets have seen declining foot traffic for years, and the Coronavirus pandemic isn’t helping.

So, what’s an aspiring business owner to do?

Luckily, brick-and-mortar isn’t the end-all-be-all of business models. Instead of investing in a physical property, consider taking your small business dreams online.

Today, we’re taking a deep dive into dropshipping. It’s a great way to start your online business both quickly and easily. In fact, with dropshipping, you can start your business for as little as it costs to create and host a website.

In this guide, we’ll discuss the following questions and topics:

  • What is dropshipping?
  • What are the pros and cons of dropshipping?
  • How do I find a dropshipping supplier?
  • How do I determine what products to sell?
  • What kind of website do I need for dropshipping?

What is dropshipping?

As you begin researching how to start an online business, you’ll come across the term “dropshipping.” But what does it mean?

Dropshipping is “a streamlined form of retail business wherein the seller accepts customer orders but does not keep goods sold in stock.” That may seem a bit confusing at first… how are you supposed to sell products when you don’t have any inventory? Is it a scam?

Hardly.

The dropshipping eCommerce model takes the fulfillment of customer orders out of your hands. Instead of paying for an inventory that may not sell and the storage fees to house it all, you’ll get your customers’ orders fulfilled at the source. This is usually done by a wholesaler, manufacturer, or 3rd party vendor (i.e. – “dropshippers”), who’ll manage packaging and shipping the product to the customer. 

Dropshipping example

Renata is a makeup artist living in New York City. She wants to grow her career in her industry. In addition to teaching people how to enhance their natural beauty, she wants to provide them with the makeup and tools they need. As she researches how to start a business, she realizes she has a big problem. Where is she supposed to store all the goods in her 300 square foot apartment? Property is expensive in the city, and she can’t afford to take out a new lease for storage space.

Enter dropshipping. All Renata needs is an eCommerce website where she can adopt a dropshipping model. She selects the products she wants to sell, and every time someone orders makeup or tools from her site she passes that order along to the dropshipper. They then package and ship the item to the original customer. In this scenario, Renata never touches the product (and this process doesn’t have to be disclosed to the end buyer, so they’ll be none the wiser.)

The pros and cons of dropshipping.

Dropshipping, as convenient as it may be, isn’t for everyone. If you’re trying to determine the best eCommerce model for your online business, consider the following pros and cons. 

The benefits of dropshipping.

  • There’s a low barrier to entry — all you really need is a website.
  • When you choose to pursue dropshipping, you’re freeing yourself from the worries and obligations of manufacturing, inventory, fulfillment, leasing space, and staffing, thereby saving yourself from those substantial expenses.
  • You have a greater ability to test products in the market. Since you aren’t buying products in bulk to store and sell, you can quickly adapt and change your offerings depending on market interests. If something isn’t selling, switch it out!
  • It’s almost like having a passive income stream. In a traditional retail model, you’re responsible for every aspect of the transaction. With dropshipping, you can focus on other aspects of your business, like marketing, while customers shop your site and a 3rd party fulfills it.
  • Work from anywhere when you dropship. Want to work from the comfort of your couch? Go for it. Prefer a typical office environment? You can do that, too. Like working from exotic locations? That’s doable as well. You can be anywhere in the world and rest assured that your products are reaching your customers.
  • No issues with logistics. Worried about having too much inventory to move? Or not enough in stock to meet demand? You don’t have to worry when you dropship — these issues are all taken care of on your behalf.
  • You only pay when your customer does. With dropshipping, you only pay for products that your customer has already ordered and paid for, so you’re not losing money on stuff that doesn’t sell. 

The cons of dropshipping.

  • There’s a low barrier to entry — all you really need is a website. This looks familiar, we know because we also listed this as a “pro” for dropshipping. Since the barrier to entry is so low, many people can start a dropshipping eCommerce business. If you’re using the same dropshippers and selling the same goods as everyone else, it’ll be difficult to stand out and succeed.
  • There can be quality issues. Take this “con” with a grain of salt. If you don’t do your research and choose a poor dropshipper with a less-than-stellar reputation, you’re likely to have issues with your products. This issue can be avoided by researching your suppliers before entering into any agreements with them.
  • Your products can change, and you’ll be none the wiser. Your supplier may decide to start using cheaper materials to craft products, or different packaging materials, and you’re likely not to know about it until a customer complains or asks about the change.
  • You bear the brunt of customer returns. As a business owner, it’s your responsibility to handle customer complaints and product issues. If someone decides to return a product, they aren’t sending it back to the dropshipper, they send it back to you. You’ll be responsible for providing any refunds unless you have a no-refund policy (n.b. — that might not sit well with potential customers.)
  • Shipping times can be lengthy. Amazon Prime, Instacart, and many other services offer near-immediate gratification with super fast shipping. Consumers understand that they may not get the same lightning fast shipping with a small business, but if your dropshipper is located on the other side of the world it can take weeks for products to arrive. Either choose a dropshipper with faster shipping times or be very transparent about shipping times prior to purchase. 
  • If you’re selling the same products as everyone else, you may end up paying more for your SEO keywords to try and get a leg up on your competitors. 

How do I find a dropship supplier?

As with most things nowadays, an internet search is a good place to start. If you aren’t finding many options by searching “dropshippers” try going beyond page one of the search results, or expanding your search with other terms like “supplier” or “eCommerce distributor” along with terms relating to the products you’re interested in selling. 

Take time to review the dropshippers you find — have other customers left reviews? If so, do they trend positively or negatively? Find out what their average shipping time is, and always, always read any contracts thoroughly before signing. 

Can’t find what you want on the Internet? Don’t fret — just contact the manufacturer of your desired goods directly. Those manufacturers can provide you with information on their vendors and dropshippers, and perhaps even set up a connection. And then there’s always the possibility that they’ll work directly with you, so don’t hesitate to ask!

If you really want to make sure you’re choosing a reliable manufacturer and dropshipper, consider ordering some of your potential products for yourself and testing them out.

What kind of products should I sell on my eCommerce site? 

Want to know what kind of products you should be selling on your eCommerce website? Well, it depends on your market and more specifically, your niche

You aren’t going to succeed trying to be a jack-of-all-trades. Amazon and Walmart already exist, and as a small business owner, it’ll be hard to compete. 

Do your research instead of allowing your personal passions and interests to dictate your products. What does your ideal customer look like? By targeting a niche and understanding their spending habits, along with other demographics, you can cater the perfect selection of products to entice them into purchasing from your site. 

Another big thing to keep in mind is that you shouldn’t be thinking in terms of your own pocketbook. Just because something may seem a little too expensive for you, doesn’t mean there aren’t people out there willing to pay that amount. This is why market research is vitally important to your success. 

Need some ideas to start identifying products you can sell? Take a look at the following suggestions. 

  • Items geared toward hobbyists. 
    • Hobbyists and side-hustlers are booming right now, and there are many who’d pay a pretty penny for a desirable item in their niche. 
  • Clothing and accessories. 
    • People purchase clothing at unprecedented rates. If you’ve got an eye for style and trends, and know your market, this can be a lucrative path to follow. 
  • Repeat purchases or subscriber products. 
    • What’s better than making a sale? Making multiple recurring sales. If you sell subscription products or products that need to be replaced often, you’re in a good position. 

What kind of website do I need for dropshipping?

Wondering what kind of website you need so that you can start your business? You’ve come to the right place, we’re experts on websites (and domains, obviously.)

When creating your website, you need to build it with the future in mind. If your thought process is something along the lines of, “I don’t have any customers yet, I’m going to get the most basic thing I can find,” then you’re not planning for your business growth or your future. 

If cost and pricing worry you, they shouldn’t. You can create great websites for less than the price of a couple of coffees. 

Here are things to consider when planning and creating your website:

  • What is my domain name going to be? 
    • Your domain name is like the digital address for your site, and oftentimes the first impression someone has of your site. 
    • A good domain name is short, memorable, and relevant. Too many hyphens and random numbers, and no one will remember it meaning they won’t get to your site. 
    • Maybe you’ve heard that .com is king, but that isn’t necessarily true. A key tenant of a good domain name is relevance, so perhaps consider a .store or .shop for your eCommerce site. 
  • Can you sell products with the plan you select?
    • Not all quick website creation plans offer the ability to sell goods and services online. Make sure yours does. 
  • Hosting and bandwidth. 
    • As your website grows and gains more online traffic, you want to make sure everyone visiting your site has a good experience. If you don’t have great hosting or enough bandwidth for your visitors, it can make for a poor experience. (Think slow-loading pages and pages timing out.)
  • Do I want to create it myself or hire someone?
    • At Domain.com, we offer a smart WebsiteBuilder that helps you get online with ease. Answer a few quick questions and our AI-powered builder will select the right layout (including images and initial content!) for your site. Don’t waste your precious time wading through tons of templates — let us help. 
      • It is important to compare the features and select the plan that best fits your needs, however for anyone intending to create an online store, the eCommerce Plan is going to be ideal. Not only does it include everything needed to sell goods, services, or even downloads of digital goods online, but also priority support to help ensure any issue you experience is resolved as quickly as possible.
    • Would you rather someone help you through the process of creating your website so you can focus on other aspects of your eCommerce dropshipping business? We can do that, too. Our experts can build you a beautiful site from start to finish, provide a strategic marketing plan that’s tailored to your needs, and teach you how to manage your site for long-term success. 

Ready to launch your eCommerce business?

We’re excited for you! We hope you’ve found this guide to dropshipping helpful, and let us know in the comments below if you have any questions. We’d also love to hear about what has and hasn’t worked for your eCommerce site so we can all learn from it. 

We wish you the best of luck and let us know if you need any help with creating your site — we’re here to help!